Ministers reject plan to pay full minimum wage at 21

Ministers sparked anger last night after they threw out a recommendation that 21-year-olds should be paid the full adult minimum wage rate. They were accused by unions of insulting young workers by refusing to put their earnings on a par with older staff.

The new Trade and Industry Secretary, Patricia Hewitt, announced that the rate for 18 to 21-year-olds would be raised from £3.20 to £3.50 an hour from October. It would mean their weekly pay rising by £10.50 for a 35-hour week, an increase of 9 per cent.

But she rejected a recommendation from the Low Pay Commission that workers should be entitled to the full adult rate – which rises from £3.70 to £4.10 in October – from their 21st, rather than 22nd, birthday. Ms Hewitt said that allowing 21-year-olds to qualify for the full rate would have made them 28 per cent more expensive for employers to hire. She said: "This is a sensible increase that raises minimum standards, but doesn't jeopardise the employment prospects of 18 to 21-year-olds."

But the TUC said it was "extremely perplexed" that the Government had rejected the Low Pay Commission's recommendation over the age at which the full rate should begin. Its general secretary, John Monks, said: "We can see no arguments to reject this clear call from a body that includes employers as well as independent experts and trade unionists."

The GMB union denounced the increase as an insult and warned of a growing divide between younger and older workers. John Edmonds, its general secretary, said: "Early analysis of the voting during the general election shows the younger generation is feeling disenfranchised and, put quite simply, a move like this on the minimum wage isn't going to help."

Bill Morris, general secretary of the Transport and General Workers' Union, said denying the adult minimum wage to 18-year-olds "reinforced age discrimination".

The Confederation of British Industry "cautiously accepted" the rise but warned the increase would be difficult for many small firms to absorb.